Analysis of Micro and Macro Environmental Factors in Global Business

This report provides a comprehensive analysis of micro and macro environmental factors impacting global business operations. It delves into the significance of these factors, including political, economic, social, technological, environmental, and legal aspects, and their influence on decision-making and performance. The report also examines micro factors such as customers, suppliers, competitors, employees, shareholders, media, and financers. Furthermore, it emphasizes the need for organizations to manage responsibly and sustainably, incorporating ethical considerations and corporate social responsibility (CSR) to address social, cultural, economic, and environmental issues. The study concludes by highlighting the critical role of these factors in achieving operational efficiency and organizational objectives, promoting ethical practices, and sustainably developing responsibility towards various environmental issues.

Micro and Macro
environmental factors

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Micro and macro environmental factors within global business environment. .........................1
LO 2.................................................................................................................................................4
Need for individuals and organization to manage responsibly and sustainably and behave
ethically to social, cultural, economic and environmental issues...............................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Global business environment is evolving at a faster pace where every business aims at
selling their products all over the world across various national boundaries. Standardizing their
products and customer globally increases profitability of business with greater market share.
It also highlights micro and macro environmental factors which influence global business
environment. It also includes corporate responsibility towards society and ethical behaviour
towards various environmental issues.
LO 1
Micro and macro environmental factors within global business environment.
There are several micro and macro environmental factors which affect the operational
efficiency of business and which are to be taken in consideration to increase profitability and
productivity of global business environment(Hamilton and Webster, 2018).
Macro environmental factors within global business environment:
Macro environment factors are uncontrollable which influences the decision making and
performance of the organization globally. These factors include political, economic, social,
technological, environmental, legal which influence the working of the business on an
international level.
1) POLITICAL FACTORS: There are various factors which affect business globally is
that different country has different rules and regulations like tax policy, tariff and foreign
trade which are to be taken in consideration for effective working of business in a global
market. Every government of the country has set different policies which are to be
followed for importing or exporting of goods or services. This helps business to
effectively carry on operations internationally.
2) ECONOMIC FACTORS: Every country in the globe has different economic structure
which are to taken into consideration like inflation rate, interest rate, exchange rate, gross
domestic product, monetary policy, economic growth, income distribution for effective
operational efficiency of the organization in the global market.
3) SOCIAL FACTORS: Socio cultural factors are of greater significance in international
business market. There are different culture and beliefs of customers in different
countries. These factors include demographic culture, age, gender, population and
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customer preference, attitude, opinion and trend which influence the global business
environment(Laudon and Traver, 2016).
4) TECHNOLOGICAL FACTORS: Technology is changing at a fast pace and it is
important for business to accept that change for increased productivity and larger market
share. Technological factors which influence global business environment are new
innovation, automation, research and development, adaption to technological change and
making people aware about the technology to communicate globally in effective and
timely manner.
5) ENVIRONMENTAL FACTORS: Business at global level must focus on using bio-
degradable products and create awareness among consumers. Business at international
level must aim at protecting global environment by reducing wastage and producing eco-
friendly products.
6) LEGAL FACTORS: The legal environment consists of various laws, rules and
regulations, policies and judgements implemented by government of different
nationality. Each country has different laws and regulations regarding employment law,
consumer legislation, environment legislations, health and safety law, which are to be
considered for business established at global level(6 Micro factors affecting Business
Environment, 2015).
Micro environmental factors influencing global business environment:
Micro environmental factors like customers, suppliers, competitors, employees,
shareholders, media, financers helps in strategic planning and decision making for effective
operational efficiency at international level.
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1) CUSTOMERS : They are the key factors which influence business at global level.
Customer are becoming more aware about their rights and this leads to increase
expectations from multinational companies. Preference and trends are changing rapidly
which leads to greater complexity and more challenges for the business to satisfy needs
of customer from all over the globe.
2) SUPPLIERS: Company which have operations globally should focus on effective
distribution channels through which raw material, goods and services and other
components can be delivered globally efficiently. Organization who has limited suppliers
may not reach their customers on time which affects operational efficiency of business.
3) COMPETITORS: Large number of competitors are present in the global business
market with same range of products and price which reduce the market share of the
company and profitability.
4) EMPLOYEES: They have a significance impact on business as they take necessary
decision to increase operational efficiency of business at global level. Employees with
high degree of knowledge and skill can increase productivity of business whereas
unskilled employees can hinder the same.
5) PUBLIC and MEDIA: Media plays a key role in making or breaking the image of the
company. Multinational business who have good brand image can increase the market
share of company at international level.
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Illustration 1: Micro environmental factors
Source: 6 Micro factors affecting Business Environment, 2015

6) SHAREHOLDERS: Investors helps in financing or raising funds for the company.
Lower funding impact operational efficiency and growth of business.
LO 2
Need for individuals and organization to manage responsibly and sustainably and behave
ethically to social, cultural, economic and environmental issues.
Corporate social responsibility focus on integrating all cultural welfare programs in the
business to achieve long term objective of the company effectively. Every business established
globally has to maintain positive environment by using eco-friendly products which reduces
wastage and minimize harmful gas in the environment. It is social responsibility of an
organization to recycle the products which help in optimum utilization of resources. Globally
established business aim at producing those products which are sustainable for the development
of environment(Crowther and Seifi, 2018).
It is important for an organization to protect the interest of society by raising money for
charitable trust and sponsor and promote events for spreading awareness in society regarding
AIDS, Ebola or donate money for those who are in need. Business strategize their decision by
continually sustaining to corporate and environment globally.
Every business should focus on its ethical and legal compliance to plan their long term
objective of the company. Business has to reduce its wastage and should recycle the products to
sustain the environmental needs of the globe and ethically use the resources. Customer needs are
changing at faster pace and every country has different culture, beliefs and opinions which are to
be taken into consideration to maintain competitive edge in the market(McWilliams, 2015).
CONCLUSION
From the above study it has been summarized that macro and micro environmental
factors play a critical role in taking strategic decision to achieve operational efficiency and
objective of the company. These factors influence the working of the business globally.
Furthermore, it also concludes that corporate has social responsibility towards
environment by using ethical and legal practices to reduce waste and optimally utilize resources
by sustainably developing responsibility towards social, cultural, economic and environmental
issues.
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REFERENCES
Books and journals
Crowther, D. and Seifi, S. eds., 2018. Redefining Corporate Social Responsibility. Emerald
Group Publishing.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.
McWilliams, A., 2015. Corporate social responsibility. Wiley encyclopedia of management, pp.1-
4.
ONLINE
6 Micro factors affecting Business Environment .2015. [ONLINE]. Available
through:<https://managementation.com/6-micro-factors-affecting-business-environment/>
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